UK lawmakers: Accounting firms abuse of gov't role

Staff at some of the world's top accountancy firms are using insider knowledge gained while working for the British Treasury to help private clients avoid tax, a committee of lawmakers said Friday.

The Commons Public Accounts Committee said Deloitte, Ernst & Young, KPMG and PwC should be barred from working for the government to stop the "ridiculous conflict of interest."

"The large accountancy firms are in a powerful position in the tax world and have an unhealthily cozy relationship with government," said the committee's chair, Labour Party lawmaker Margaret Hodge.

The committee said in a report that it had seen "cases of poacher, turned gamekeeper, turned poacher again, whereby individuals who advise government go back to their firms and advise their clients on how they can use those laws to reduce the amount of tax they pay."

The legislators said the practice made it harder for the government to stop tax avoidance.

Tax paid by major international corporations has become a hot issue in Britain since the same committee last year accused big firms like Amazon, Google and Starbucks of using loopholes to "immorally" avoid tax.

The government has vowed to crack down on tax avoidance.

But the Treasury strongly rejected the committee's latest report, saying its findings bore "almost no resemblance to reality of what government is doing or what is happening."

Accountancy firms defended the behavior of their staff.

"We disagree with the committee's claims that there is a lack of clarity over where we draw the line between acceptable tax planning and aggressive tax avoidance," said Bill Dodwell, head of tax policy at Deloitte. "We have a significant role in helping our clients understand the law and meet their vital compliance obligations."

Kevin Nicholson, head of tax at PwC, said the company's staff "operate under a clear code of conduct" and professional guidelines.

"We strongly disagree with the (committee's) conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it," he said.